AUD and NZD under pressure

30.08.2019 12:10|Forex conotoxia.com

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There is a terrible streak of currencies from Antipodes. The Australian dollar and New Zealand dollar are falling for the sixth week in a row. The main reason for the depreciation of AUD and NZD seem to be concerns about trade tensions between the US and China, which translates into a potentially slower global economic growth and reduces demand for commodity currencies.

For Australia, China is the main trading partner. USD 85 billion worth products or 35 percent Australia's entire exports are sent to China. China also accounts for 24 percent of all Australian imports. These are products worth USD 47 billion. Meanwhile, for New Zealand, the percentage share of China is 24 percent in exports and 20 percent in import. The above trade dependencies clearly show that the condition of the Antipode countries is very dependent on the condition of the Chinese economy, which in turn becomes dependent on how the trade war will continue.

NZD/USD weekly chart

NZD/USD weekly chart. Conotoxia trading platform

The NZD/USD exchange rate, continuing the downward trend, has reached the lowest level since 2015. In addition, the lower limit in the main trend channel is going to be broken this week. The impetus and fast movement of prices may indicate a definite advantage for sellers. If the weekly candle closes below the line drawn through the bottom, it could be a clear confirmation of the strength of supply and the lows from 2015 may be at risk.

AUD/USD daily chart

AUD/USD daily chart. Conotoxia trading platform

On the other side, the AUD/USD exchange rate should once again start defending the low that was set at the beginning of the year during the "flash crash" phenomenon. It was a sudden collapse of prices, which could have been caused by low liquidity on the market together with the participation of algorithmic orders. However, AUD/USD has twice defended support at 0.6680. Thus, only defeating it could open the way to the levels we recently observed in 2009.

 

Daniel Kostecki, Chief Analyst Conotoxia Ltd.

Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal Opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.

69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.


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